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06 October 2009

£3,000 Tax-free ISA boost for over 50s

Savers aged 50 and over can now take advantage of a £3,000 increase in the tax-free ISA allowance, with the limits rising to £10,200 (up from £7,200), of which up to £5,100 can be saved in cash (up from £3,600).

Over 6 million people aged 50 and over subscribe to an ISA each tax year, and this measure will enable each of them to invest an extra £3,000, of which up to £1,500 can be in cash. 

The Chancellor, Alistair Darling said:

"I'm determined to help savers, because while low interest rates have helped millions of homeowners, I also know that they have hit those who rely on their savings to get by. This is why I am increasing the ISA allowance for all over-50s, by £3,000 to £10,200 and from April next year for all savers."

The Exchequer Secretary, Sarah McCarthy-Fry said

“This change will make a real difference to older people who want to save a little bit extra. Alongside measures such as the Child Trust Fund and the Saving Gateway, due to be launched next year, this shows that Government is committed to supporting savings for all generations.”

From 6 April 2010 the ISA increase will be available for all, regardless of age.  Over 19 million people currently have an ISA and the increase will directly benefit over 5 million people who currently use their full ISA allowance.

Notes for editors

1. From 6 October 2009, the ISA subscription limit will increase to £10,200 for anyone eligible to invest in an ISA who was born on or before 5 April 1960 (i.e. who will be aged 50 or over during the current tax year).  Up to £5,100 of the new ISA allowance can be saved in a cash ISA with one provider.  The remainder of the £10,200 can be invested in stocks and shares ISA with either the same or another provider.  Alternatively, the full £10,200 can be invested in a stocks and shares ISA with one provider.

2. These higher limits will apply to all eligible ISA investors with effect from 6 April 2010.

3. Older people who are looking to make the most of their savings are also encouraged to shop around for the best deals to suit their needs. The Financial Services Authority's money made clear website and telephone helpline on 0300 500 5000 can help them to do this. 

4. Alongside today’s ISA limit increase, the Government will continue to demonstrate it’s commitment to supporting savers, with further measures also announced at the Budget.

5. From November this year the Government will increase the amount of savings that is disregarded when calculating entitlement to Pension Credit and pensioner-related Housing Benefit and Council Tax Benefit. The amount will rise from £6,000 to £10,000 increasing the income of over half a million pensioners by £4 per week on average.

6. The Government is also launching a new tax back campaign later in October to contact 3.4 million pensioners on low-to-middle incomes who may have overpaid tax on their savings interest. This will be worth £200 on average to those pensioners who may have overpaid tax in the past.

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